Author Topic: Seeking advice on my current life / financial situation...  (Read 3933 times)

Buckwheat

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Seeking advice on my current life / financial situation...
« on: February 18, 2017, 04:50:23 PM »
I am currently 45 years old and I'm thinking about "shutting it down" to maximize time with spend with my three young kids (ages 7, 4, and 2), travelling, and just plain old relaxing on a full time basis.   My wife wants to keep working for the foreseeable future (she loves her job and also has great health insurance coverage for our family).

Our monthly take home pay right now is about $12,000.  If I quit working completely, we'd have about $4,000 take home pay from my wife's salary -- which would be enough to cover our monthly costs with a few hundred left over for savings, etc.

I know it's mostly only something I can answer for myself but, based on the below numbers, is this a wise overall decision for me?

Side notes - all three of my kids will have college funds taken care of by some inheritance, so that should not be an issue.  Additionally, as a software developer, I can see myself dabbling in some side projects 10-20 hours per week and potentially netting around $40-50K per year ("walking around money").  I also have some small business projects that are starting to show promising signs of blossoming into passive revenue streams for me (on the order of $500-1,500 per month).

I have always lived a fairly simple life style.  I can see myself easily just "bumming around" for the rest of my life and living relatively stress free.  Maybe not?  My wife seems to think I would get bored very fast.

Any advice is greatly appreciated!

DEBT:

   Mortgage: $235,000

PORTFOLIO:

   ETF: $250,000
   Savings: $240,000
   401K: $456,000
   
MONTHLY COSTS:

   Fixed: $2,700
   Flexible spending: $800

RedwoodDreams

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Re: Seeking advice on my current life / financial situation...
« Reply #1 on: February 18, 2017, 05:16:44 PM »
Sure, why not? Looks like you're in a great position financially, and it can mean great things for your family if you're able to be more available for your kids.

As a software developer, especially if you keep doing small side projects, you'd be able to return to some kind of work if needed eventually...

Only thing I'd say is be sure you have some good discussions with your wife about expectations of how things will change at home if you're no longer working FT-- re: child care, home tasks, cooking, how much of that 'free' time is actually all yours, etc. I worked for many years while my husband took care of our son, and in retrospect, I wish we'd had more conversations, and regularly, about what we wanted our life to look like, how to divvy up home responsibilities, etc. Resentment can build if one person comes home dog tired and there's no food in the house, for example. :-)

Good luck, and congrats on getting yourselves to this enviable position!

AMandM

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Re: Seeking advice on my current life / financial situation...
« Reply #2 on: February 18, 2017, 09:50:20 PM »
Looks great!
Will your spending increase once you retire, if "bumming around" means travelling, picking up hobbies, etc.?

Buckwheat

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Re: Seeking advice on my current life / financial situation...
« Reply #3 on: February 19, 2017, 09:06:53 AM »
Only thing I'd say is be sure you have some good discussions with your wife about expectations of how things will change at home if you're no longer working FT-- re: child care, home tasks, cooking, how much of that 'free' time is actually all yours, etc. I worked for many years while my husband took care of our son, and in retrospect, I wish we'd had more conversations, and regularly, about what we wanted our life to look like, how to divvy up home responsibilities, etc. Resentment can build if one person comes home dog tired and there's no food in the house, for example. :-)

RedwoodDreams - You're 100% right.  Having those things figured out in advance will definitely help.  I have had a scaled down experience in the past where I was working from home a lot and found myself with a lot more extra time by not having to commute.  My wife quickly realized that I now had more time to clean, go to the store, pickup/dropoff the kids, etc :)

Thanks for the advice.

Buckwheat

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Re: Seeking advice on my current life / financial situation...
« Reply #4 on: February 19, 2017, 09:10:42 AM »
Will your spending increase once you retire, if "bumming around" means travelling, picking up hobbies, etc.?

Good point.  I have created some fairly detailed spreadsheets where I look at all possible scenarios -- everything from only needing money for fixed costs to fixed costs + lifestyle costs.

waltworks

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Re: Seeking advice on my current life / financial situation...
« Reply #5 on: February 19, 2017, 10:23:36 AM »
You're totally good financially, but you may want to make sure your wife is completely onboard. Does she like her job? Because you'll be depending on her (only to a small extent, but still) to keep this setup functioning.

As long as you sort that, I say go for it. You are basically set, and yes, you will end up making some money on the side.

-W

mxt0133

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Re: Seeking advice on my current life / financial situation...
« Reply #6 on: February 19, 2017, 01:52:36 PM »
How will you travel with your family if your wife is still working?

It seems like you can save for another 2-3 more years and be FI.  If you really feel burned out take a few months break and re-evaluate from there.  If you stop working your wife's take home should also go up as you would be paying less in taxes.

I also have kids your age and the current plan is to work for another year then take a few months off and then go back to work for a few years, rinse and repeat.  I don't do well with too much time off and work give me some structure plus I am very conservative so even if I did have a bunch of time off but don't feel secure I will just be anxious the whole time and won't be able to really enjoy myself.

Buckwheat

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Re: Seeking advice on my current life / financial situation...
« Reply #7 on: February 19, 2017, 02:12:41 PM »
How will you travel with your family if your wife is still working?

It seems like you can save for another 2-3 more years and be FI.  If you really feel burned out take a few months break and re-evaluate from there.  If you stop working your wife's take home should also go up as you would be paying less in taxes.
Travel would be one major vacation per year for the family, plus some long weekend getaways fairly close to home.

Additionally, my wife and I might take a few small trips together, etc -- as well as each of us hanging out with friends here and there (golf trips, etc).

I have all of that carved into my budget.

As for the burn out -- you're probably right.  I'm most likely looking at things from an extreme perspective -- not sure I'm ready to hang it up completely.   I probably just need to recharge for a few months like you said and then ease back into things.

Full Beard

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Re: Seeking advice on my current life / financial situation...
« Reply #8 on: February 19, 2017, 02:57:15 PM »
You guys are in great shape!  I say go for it.  What's the house worth and what's the interest rate on the mortgage?  If you used the 240K to pay off the mortgage that could further reduce your fixed costs.

Buckwheat

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Re: Seeking advice on my current life / financial situation...
« Reply #9 on: February 20, 2017, 12:44:13 PM »
You guys are in great shape!  I say go for it.  What's the house worth and what's the interest rate on the mortgage?  If you used the 240K to pay off the mortgage that could further reduce your fixed costs.

We paid $324K for our house and it's currently worth about $400K.

We have about $235K in principle left to pay over about 18 years at 3.75% interest (total interest remaining is about $88K).

I have definitely been thinking about just paying it off.

Retire-Canada

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Re: Seeking advice on my current life / financial situation...
« Reply #10 on: February 20, 2017, 12:52:18 PM »
I would invest that $240K in savings. That's a huge part of your liquid net worth doing nothing for you. Get it invested and you'll have $490K working for you. In 10yrs that'll be ~$1M and it will be able to support most of your spending without your wife having to work much.

Buckwheat

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Re: Seeking advice on my current life / financial situation...
« Reply #11 on: February 20, 2017, 01:13:54 PM »
I would invest that $240K in savings. That's a huge part of your liquid net worth doing nothing for you. Get it invested and you'll have $490K working for you. In 10yrs that'll be ~$1M and it will be able to support most of your spending without your wife having to work much.

I have VTSAX at Vanguard.  It was solid in 2016 after a dreadful 2015 and I feel decent about throwing $200K more into it and just letting it ride like you suggested (keeping the $40K in savings).

https://finance.yahoo.com/q/pm?bypass=true&s=vtsax&ltr=1

That said, the Doomsday clock is very close too midnight.  The world is heading towards turmoil IMHO.  War is very likely sometime over the next 5 years or so. Not sure what the impact of that will be but it's probably not going to be good.

If everything goes to hell (potentially even worse than 2008), then I'm stuck working another 10-15 years.  The prospect of that is why I've held it in savings.

Part of me wants to "play it safe" and simply pay off the house.  Worst case scenario, I can cover my property taxes by recycling tin cans and our family can live off of Ramen noodles.

Retire-Canada

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Re: Seeking advice on my current life / financial situation...
« Reply #12 on: February 20, 2017, 01:16:30 PM »
That said, the Doomsday clock is very close too midnight.  The world is heading towards turmoil IMHO.  War is very likely sometime over the next 5 years or so. Not sure what the impact of that will be but it's probably not going to be good.

If everything goes to hell (potentially even worse than 2008), then I'm stuck working another 10-15 years.  The prospect of that is why I've held it in savings.

Being afraid is very expensive. I don't recommend it.

I've got the opposite viewpoint. Once I get enough equity in my house I'll pull it out and invest it. If the SHTF I'd rather have more stocks and own less of my house than the other way around. I have more faith in the companies I own all over the world than my local real estate market. In many SHTF scenarios I'd want to grab my stuff and go someplace where things are better. That's hard to do with a huge % of my NW tied up in a house. Personally I think things will keep getting better in our lifetimes.
« Last Edit: February 20, 2017, 01:22:03 PM by Retire-Canada »

Buckwheat

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Re: Seeking advice on my current life / financial situation...
« Reply #13 on: February 20, 2017, 01:26:11 PM »
Being afraid is very expensive. I don't recommend it.

No guts, no glory... I get it.  My head gets stuck on diversification though.  I know that's the best part of the VSTAX and similar index funds (you're betting on humanity to innovate and succeed).  The risk is minimal, I know... and War can be good for business.

That said, getting a 100% guarantee pay out of $88K (interest saved) is a decent option.  I know it's peanuts in comparison to the upside of getting 7% out of the market... but John Goodman's speech in The Gambler is forever stuck in the back of my head.

Retire-Canada

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Re: Seeking advice on my current life / financial situation...
« Reply #14 on: February 20, 2017, 01:40:33 PM »
That said, getting a 100% guarantee pay out of $88K (interest saved) is a decent option.  I know it's peanuts in comparison to the upside of getting 7% out of the market... but John Goodman's speech in The Gambler is forever stuck in the back of my head.

You won't save $88K because part of that interest will be eaten up by inflation. Currently your mortgage balance is being reduced by inflation at 1.5% - 2%/yr.

waltworks

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Re: Seeking advice on my current life / financial situation...
« Reply #15 on: February 20, 2017, 03:23:17 PM »
IMO, if you are very risk averse having that money in some relatively liquid form has quite a bit of value too. Your house, not so liquid.

-W